You are considering a safe investment opportunity that requires a

$1,470

investment today, and will pay

$940

two years from now and another

$570

five years from now.

a. What is the IRR of this investment?

b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of

5%

per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain.